Figuring out your marketing budget

As a nod to the marketing budget craze I've been on lately, I've been in a number of conversations with folks on my various lists the last couple of weeks about marketing budgets - what to spend on, what to save on, what works, what doesn't - and it occurred to me that a number of folks taking the entrepreneurial track, at least in the smaller sense, find themselves stuck in one of two modes:

1) they get overwhelmed the moment you start talking figures and refuse to set a marketing budget; thus, they end up spending either too much or too little money on things that they guess MIGHT work, and often end up jaded and losing profit;

2) they get caught in this self-doubting cycle of "I can't afford to market my business," which results in a further cycle of either NOT marketing their business, or marketing ineffectively, which keeps them in the cycle of "I can't afford to..."

To both of these categories of folk, a marketing budget is a big, scary thing. It's money not in their pocket. It's also the fear of the unknown - what if I spend the money, and don't get results? What do I do then? How much am I supposed to spend on this anyway?

Well, I gotta tell you: marketing requires two things - time and money. The less money you're willing to spend, the more time you're going to have to put in. And both, unfortunately, are necessary expenses.

So how do you figure out what's right for your business? While every business is different (and I can't claim to speak for every single business out there), there are a few things that you should never, EVER skimp on:

1) your logo,
2) your website,
3) your business card and associated marketing materials (especially brochures).

These are your visual identity. This is how your audience - the people who will ultimately put the roof over your head and keep clothes on your back - witness and form impressions of you and your business. You can't afford NOT to spend some money on these things.

But how much? The answer depends on a number of things - the size of the business, how much income you expect/need, what type of things you absolutely need in terms of marketing materials, website, etc. An e-store or a rich Flash-based site with widgets and gadgets all around, for example, will cost significantly more than a simple "here I am!" site.

But give yourself some money, and be generous with it - the rule of thumb I often hear is 10-20% of your annual income should be spent on marketing. And I agree with this - especially in the first year, when you're just starting out and getting all your initial work developed. Let yourself spend that money - but do some research and find the right people to spend it with. In the years after, you can modify it a bit, as you figure out the methods that work for you, and you discover easier, lower cost methods.